Consumers are set to pay more for electricity after power producer KenGen sought the energy regulator’s greenlight to recover costs of maintenance of power plants through higher bills.
The State-owned company wants the nod from the Energy Regulatory Commission (ERC) to pass on the tariffs for its hydropower stations following recent upgrades.
Maintenance costs refund is provided for in the power purchase agreement (PPA) that binds Kenya Power to buy electricity from KenGen for onward sale to homes and businesses, according to officials.
“We have submitted our cost expenses for each plant to the ERC. It’s up to them to decide whether the tariff increment will be gradually increased over a staggered period,” KenGen director for corporate and regulatory affairs Simon Ngure said Monday on the sidelines of an investor briefing.
Several hydropower plants have undergone upgrades and change of equipment, including Kamburu (94 megawatts), Kindaruma (72 megawatts) and Turkwel (106 megawatts).
“We have changed the turbine governors, skids and excitation systems for several plants,” said Mr. Ngure, but declined to disclose the costs involved.
The turbine governor controls the output of electricity to match a dip or surge in the national grid demand, by controlling water flow to adjust its rotation speed.
KenGen had last year also sought a tariff increment for its major hydropower plants with an installed capacity of 765 megawatts (MW) or 47 percent of the firm’s total power capacity.
The push for higher wholesale tariffs was informed by the expansion of the plants’ capacity since 2009 when the company signed an electricity purchase agreement with Kenya Power.
Kindaruma hydropower station’s capacity, for instance, had increased from 48 megawatts (MW) to 72 MW over the period.
“We got Kenya Power to adjust the purchase agreement to pay for the increased capacity but the tariffs more or less remained the same,” said Mr. Ngure.
Kenya Power had last year resisted KenGen’s calls to raise the tariffs that would translate to a higher consumer bills burden.
Should the energy regulator approve the power producer’s request, this could see Kenya Power push for increased electricity retail prices for homes and businesses.
Currently, homes consuming 200-kilowatt hours (kWh) pay Sh3,691, up from Sh3,398 the same month last year, or Sh293 more.
The Energy ministry officials last year shot down Kenya Power’s quest to increase retail tariffs, arguing that it goes against the policy of delivering cheap electricity needed to ease the burden on households and make Kenya a competitive country.
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Credit: Business Daily